Finding a New Auto Loan

11 Mar 2008 Tell a Friend

If you are looking to buy a new car, there are specific lenders that you can approach for car credit.  Lenders would not usually expect you to secure the loan against your property, since car loans are generally for a sum lower than £20,000. 

There are several situations in which you might need to secure the car loan against your property or another valuable asset, however.  If you have a poor credit history from past borrowing mistakes, you may constitute too high a risk for the lender to offer you an unsecured loan.  The alternative would be an extremely high interest rate, which would result in you paying over the odds for your car loan. 

The other situation in which you may wish to consider a secured loan to purchase a car is if you have not got any borrowing history.  This is a less likely scenario, since most homeowners in the UK will have had to borrow money in order to purchase their homes.  However if you are one of the lucky ones who did not, you will either have to secure the loan against your property, or first build up a credit history to demonstrate to the lender that you are responsible with your finances.  This would involve taking out a credit card, and paying the balance off in full and on time each month, for a period of around six months. 

Of course securing a loan against your property is a big risk to take, because you are at risk of losing your property if you are unable to keep up repayments on the loan.  It is sensible to seek financial advice before proceeding with either an unsecured or a secured car loan, because borrowing can have severe long-term effects on your credit history if not undertaken correctly. 

For advice about a car loan, please fill out our short loan form.  We will then connect you with an experienced adviser from the SimplyFinance network who will be able to advise you as to the best course of action based on your personal circumstances.